How Do Scottish Protected Trust Deeds Affect Your Assets?

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How Do Scottish Protected Trust Deeds Affect Your Assets?

One of the most worrying aspects for anyone considering entering a debt solution is what happens to their assets.

Until recently, the Protected Trust Deed (Scotland) Regulations 2008 laid out a number of requirements that had to be met before a Trust Deed could become protected, which means that your agreement achieves legal status and creditors are prevented from making payment demands of you.

One requirement was that all of your assets – your estate – must be handed over to your Trustee for valuation, sale and distribution to creditors. Essential household goods were excluded, including your car, unless it was of a high value. You may have been asked to buy a cheaper model, and unfortunately your property wasn’t excluded either, even if it was in negative equity.

In the latter case a trustee would assess the value of your home (and any other properties), get a redemption figure from your mortgage or any loans that you have secured on it, and you would probably have to remortgage or sell the property so the equity could be released to the creditors.

This of course depended on whether you co-owned your property with someone else and whether they gave their consent for the property to be valued or part of the arrangement. In some circumstances, if they refused a Trustee would have to go to court and force the sale.

Something had to change… In 2010 it finally did.

Changes To The Law

The Bankruptcy (Scotland) Act 1985 was amended on 15 November 2010 to allow the exclusion of a debtor’s main residence from their Protected Trust Deed as long as secured creditors agreed not to claim for any debt under the arrangement.

It’s aim was to reduce the homelessness caused by families being made to sell their home to release equity.

But the expensive car will still have to go!

Unfortunately, if you have an expensive car that you own outright you will have to downgrade to a cheaper model as there is no provision under the new amendments to exclude these from your Protected Trust Deed.

Help And Debt Advice

If you are considering the Protected Trust Deed why not talk to one of our experienced advisers free on 0800 193 1024. Alternatively, use our Free Online Calculator to see if you qualify.